INTC 10-K & 10-Q changes, risk factors and insider trading

Our MD&A begins with an overview of significant events and key developments in 2025 that meaningfully impacted our financial results and/or business. We then provide a detailed discussion of our operating segment results, followed by our consolidated results of operations and other required disclosures for 2025, 2024 and 2023. We conclude with a discussion of our critical accounting estimates.

Significant Events and Trends Impacting Results

The following discussion highlights significant events, key developments, and trends that we believe meaningfully impacted our consolidated financial results and financial position during 2025 and that we believe may continue to influence our future operating results and financial position, as well as specific matters that occurred in 2024 that impact the comparability of our results.

U.S. Government Agreements

On August 22, 2025, we entered into a Warrant and Common Stock Agreement (U.S. Government Agreement) with the U.S. Department of Commerce (DOC) to support the continued expansion of U.S. semiconductor technology and manufacturing leadership. On August 27, 2025, pursuant to the terms of the U.S. Government Agreement:

▪we entered into an amendment to our commercial CHIPS Act agreement with the DOC removing the prior project milestone requirements and other conditions to disbursements under the agreement, as well as substantially all other requirements under the agreement other than those required by law, including those associated with the $2.3 billion previously received and recognized by us as government incentives pursuant to our government grant accounting policy;

▪we received the full amount of the accelerated disbursements remaining under the commercial CHIPS Act agreement of $5.7 billion;

▪we issued to the DOC 275 million shares of our common stock and a warrant to purchase up to 241 million shares of our common stock at $20.00 per share if we were to cease to directly or indirectly own at least 51% of our Intel Foundry business; and

▪we issued into escrow 159 million shares of our common stock, to be released to the U.S. government on a $20.00 per share basis as we receive the $3.2 billion of disbursements contemplated by our existing agreement and related performance obligations with the U.S. government under the CHIPS Act's Secure Enclave program. As of December 27, 2025, we had released 3 million Escrowed Shares upon our receipt of cash proceeds for our performance under Secure Enclave.

Our accounting conclusion for the U.S. Government Agreement as presented in our Consolidated Condensed Financial Statements that were included in our Q3 2025 Form 10-Q was subsequently adjusted based upon our consultation with the staff of the SEC on this matter, which concluded in our fourth quarter of fiscal 2025, subsequent to our Q3 2025 Form 10-Q filing date of November 6, 2025. Our results in this Annual Report on Form 10-K for the fiscal year ended December 27, 2025 are reflective of this consultation. We have concluded that such adjustments are immaterial to our Consolidated Condensed Financial Statements included in our Q3 2025 Form 10-Q. Refer to “Note 5: Earnings (Loss) Per Share and Stockholders' Equity" within Notes to Consolidated Financial Statements and to our Risk Factors section for additional details.

Private Placement Share Sale Agreements

In Q3 2025, we entered into two agreements for the issuance and sale of shares of our common stock in private placements to support our strategic investments in advanced manufacturing, AI infrastructure and long-term growth initiatives:

▪on August 18, 2025, we entered into an agreement with SoftBank Group to issue and sell to SoftBank Group 87 million shares of our common stock at $23.00 per share, representing an aggregate cash purchase price of $2.0 billion. The issuance and sale of the shares was completed on September 26, 2025; and

▪on September 15, 2025, we entered into an agreement with NVIDIA to issue and sell to NVIDIA 215 million shares of our common stock at $23.28 per share for an aggregate cash purchase price of $5.0 billion. The issuance and sale of the shares was completed on December 26, 2025.

Altera Divestiture

On April 14, 2025, we signed a transaction agreement with SLP VII Gryphon Aggregator, L.P., an affiliate of SLP, to sell 51% of all issued and outstanding common stock of Altera, our wholly owned subsidiary as of that date. On September 12, 2025, we completed the divestiture of 51% of Altera for net purchase consideration of $4.3 billion, consisting of $4.8 billion in cash proceeds received within the third quarter of 2025, $500 million in deferred cash proceeds payable to us no later than December 31, 2027, an offset of $400 million for cash transferred to Altera with the sale, an offset of approximately $469 million in separation and employee-related costs we have agreed to fund to the purchaser, and an offset for other direct and incremental costs incurred in connection with the sale. As of December 27, 2025, we recorded $463 million within other long-term assets for the present value of deferred consideration outstanding from SLP and $327 million and $97 million within other accrued liabilities and other long-term liabilities, respectively, for amounts payable to SLP for separation and employee-related costs that have not yet been paid.

Upon closing the transaction, we deconsolidated Altera from our Consolidated Financial Statements and retained a 49% minority investment in Altera which we accounted for under the equity method of accounting. The $3.2 billion value of our non-marketable equity method investment in Altera is classified within equity investments in the Consolidated Balance Sheets at December 27, 2025, and was recognized as a non-cash investing activity within the 2025 Consolidated Statements of Cash Flows. The Altera divestiture resulted in a pre-tax gain of $5.6 billion recognized within interest and other, net, which is net of certain costs we have agreed to fund to SLP, as well as direct and incremental costs we incurred to sell the business. Approximately $2.1 billion of the gain resulted from the remeasurement of our non-marketable equity investment in Altera to its fair value at the transaction close date. Refer to "Note 10: Acquisitions and Divestitures" within Notes to Consolidated Financial Statements for further information.

In Q2 2025, we commenced an enterprise-wide initiative to transform our culture and the way in which we operate, which is designed to simplify the way we do business and drive transparency and accountability across the company. As part of this transformation, we implemented the 2025 Restructuring Plan to lower expenses, streamline our organizational structure and reduce management layers across functions while reallocating resources toward our core client and server businesses by reducing investment in lower-priority programs and initiatives. These headcount reduction initiatives reduced our core Intel workforce by approximately 15% by the end of fiscal 2025, as compared to our Q2 2025 ending employee headcount. In 2025, we recognized restructuring charges of $2.2 billion, consisting primarily of charges from initiating and deploying the 2025 Restructuring Plan and incurring charges as we substantially completed the 2024 Restructuring Plan. Charges in 2025 were primarily composed of cash-based employee severance and related employee exit charges of $1.8 billion and non-cash asset impairment charges of $474 million resulting from the exit of certain non-core lines of business and the consolidation and exit of certain real estate properties.

Our 2025 consolidated results of operations were also affected by accelerated depreciation and impairment charges recognized for certain manufacturing assets that were determined to have no remaining operational use. This determination was based on an evaluation of our current process technology node capacities relative to projected market demand for our products and services. These non-cash charges of $950 million, net of certain items, were recorded to cost of sales in 2025, impacting the results for our Intel Foundry segment.

In 2024, we announced and initiated the 2024 Restructuring Plan, which reduced headcount, consolidated and reduced our global real estate footprint, and reduced our overall operating expenses. As a result of initiating and deploying our 2024 Restructuring Plan, we recognized restructuring charges of $2.8 billion in 2024 and $348 million in 2025.

Non-Controlling Interests

Net income (loss) attributable to non-controlling interests is comprised of net income or loss attributable to the non-controlling interests in Mobileye, IMS Nanofabrication, Ireland SCIP and Arizona SCIP, all of which are our majority owned subsidiaries that we consolidate. Net income attributable to non-controlling interests was $293 million in 2025 and net loss attributable to non-controlling interests was $477 million and $14 million in 2024 and 2023, respectively. Net income attributable to non-controlling interests in 2025 was primarily driven by the placement of the first tranche of Arizona SCIP’s manufacturing assets into service during 2025 and the ramp of factory output from Fab 34 resold to us from Ireland SCIP. In 2024, net loss applicable to non-controlling interests related to the Q3 2024 non-cash impairment of goodwill related to our Mobileye reporting unit. We anticipate that net income attributable to non-controlling interests will continue to increase in 2026 as additional tranches of Arizona SCIP’s manufacturing assets are placed into service, and to increase significantly in 2027 following our expected completion of construction of Fab 34 in Ireland. Refer to "Note 4: Non-Controlling Interests" within Notes to Consolidated Financial Statements.

Manufacturing Expansion Projects and Future Node Development

As part of the transformation of the company, in Q2 2025 we announced that we would take a more disciplined approach to the deployment of capital. The design, development and manufacturing of leading-edge semiconductor manufacturing process technologies, or nodes, is risky and capital-intensive, and it takes years for capital investments to yield a return. Under our more disciplined approach, we intend to invest capital in future node development and new or upgraded manufacturing facilities only where we have a clear line of sight to an acceptable return on that capital.

On the manufacturing side, we initiated the consolidation of our Costa Rican assembly and test operations into larger existing sites in Vietnam and Malaysia, slowed the pace of construction for our new Ohio fab and discontinued planned expansions in Germany (fab) and Poland (assembly and test) to better align capital spending with market demand. These actions reflect our focus on deploying capital in coordination with tangible milestones and scaling capacity as needed.

With respect to leading-edge process technology development, we recently released the Intel Core Ultra Series 3 processors, our first products manufactured on our new leading-edge node, Intel 18A, and we continue to develop its derivative node, Intel 18A-P, designed for future Intel products and external Intel Foundry customers. We are also focused on the continued development of Intel 14A, the next generation node beyond Intel 18A and Intel 18A-P, and on securing a significant external customer for such node. However, if we are unable to secure a significant external customer and meet important customer milestones for Intel 14A, we face the prospect that it will not be economical to develop and manufacture Intel 14A and successor leading-edge nodes on a go-forward basis. In such event, we may pause or discontinue our pursuit of Intel 14A and successor nodes and various of our manufacturing expansion projects. While we continue to evaluate Intel 14A for use in future Intel products and our plan includes an initial product designed to utilize Intel 14A, at present we are maintaining the option to design future Intel products requiring nodes with performance beyond Intel 18A and Intel 18A-P to be produced internally or by an external foundry. If we were to discontinue development of Intel 14A and successor nodes, we expect that a majority of our products would continue to be manufactured in our own facilities utilizing our nodes up to Intel 18A-P through at least 2030. By focusing on our customers and delivering the best semiconductor products to the market, manufactured on the most appropriate internal or external node from a performance and cost perspective, and only deploying capital on new nodes and manufacturing facilities where we believe they will yield an attractive return, we believe we can improve the competitiveness of our products business, and the overall financial results for the company.

Intel Products consists substantially of the design, development, marketing, sale, support and servicing of CPUs and related semiconductor products for third-party customers. Intel Products is comprised of two operating segments: CCG and DCAI. CCG delivers platforms and processors that power PCs and edge devices, enabling enhanced performance, connectivity and user experiences for consumer and commercial markets with capabilities that also support retail, industrial robotics and AI ecosystems at the edge. DCAI delivers workload-optimized solutions based upon our x86 architecture for data centers, including CPUs, AI accelerators, NICs, IPUs and custom ASICs, enabling performance and scalability for cloud, enterprise, telecommunication and HPC environments. The manufacturing of our Intel Products offerings is performed by Intel Foundry and, to a lesser extent, by certain third party manufacturers.

Escrowed Shares Issued to the U.S. Government

In Q2 2026, in connection with our agreements with the U.S. government and shares of our common stock held in escrow for the benefit of the U.S. government under such agreements, we recognized a $12.5 billion loss related to the net change in the fair value of shares of our common stock released from escrow during the quarter and remaining in escrow at the end of Q2 2026, driven by an increase in our stock price. The fair value of the related derivative liability was $15.6 billion at the end of Q2 2026, which we recognized within other accrued liabilities and other long-term liabilities (refer to "Note 4: Earnings (Loss) Per Share and Stockholders' Equity" within Notes to Consolidated Condensed Financial Statements for further information).

In Q2 2026, we acquired from Apollo its 49% minority ownership interest in our majority-owned and consolidated Ireland SCIP VIE for aggregate cash consideration of $14.2 billion, inclusive of transaction costs. We funded the repurchase of Apollo's non-controlling equity interest through a combination of existing cash and cash equivalents, short-term investments and a $6.5 billion term loan facility that we entered into in Q2 2026 and subsequently repaid in Q2 2026 using proceeds from the issuance of $6.5 billion aggregate principal amount of senior fixed-rate notes (refer to "Note 3: Non-Controlling Interests" and “Note 11: Borrowings” within Notes to Consolidated Condensed Financial Statements).

Ireland SCIP was established in 2024 in connection with the construction and operation of Fab 34, with Apollo acquiring a 49% minority ownership interest and the parties entering into related operating and ancillary agreements governing the construction, operation and utilization of the fab. Our Consolidated Condensed Financial Statements for Q2 2026 reflect our 100% ownership of Ireland SCIP, the substantial termination of the related operating and ancillary agreements between the parties, the elimination of $142 million of non‑controlling interest in Ireland SCIP and the extinguishment of the $532 million derivative liability associated with delay‑related liquidated damages provisions. The residual consideration of $13.5 billion was recognized as a reduction to our capital in excess of par value (refer to “Note 3: Non-Controlling Interests” within Notes to Consolidated Condensed Financial Statements).

The design, development and manufacturing of leading-edge nodes is risky and capital-intensive, and it takes years for capital investments to yield a return. We remain committed to maintaining a disciplined approach of investing capital in future node development and new or upgraded manufacturing facilities only where we have a clear line of sight to an acceptable return on that capital.

Operating Segment Revenue Summary

▪CCPG revenue increased $1.0 billion from Q2 2025 and $1.1 billion from YTD 2025. Client revenue (collectively notebook and desktop) was $7.7 billion in Q2 2026, up $1.1 billion from Q2 2025, and $14.3 billion in YTD 2026, up $1.2 billion from YTD 2025, primarily driven by ASP increases of 27% and 22%, respectively. The majority of the increase in ASPs was driven by a higher mix of premium products sold in Q2 2026 and YTD 2026, with demand-based pricing actions contributing to a lesser extent, in part to offset higher input costs. This increase in client revenue was partially offset by volume decreases of 8% compared to Q2 2025 and 10% compared to YTD 2025. Market demand exceeded our available product supply in Q2 2026 and YTD 2026 due to industry-wide supply constraints. While supply constraints impacted our results during the first half of 2026, we expect these constraints to ease over the second half of 2026. Other CCPG revenue was $1.1 billion in Q2 2026, down $127 million from Q2 2025, and $2.3 billion in YTD 2026, down $82 million from YTD 2025.

▪DCAI revenue increased $2.3 billion from Q2 2025 and $3.2 billion from YTD 2025, primarily driven by higher server revenue, which increased $2.0 billion in Q2 2026 and $2.7 billion in YTD 2026 due to ASP increases of 48% and 38%, respectively. The majority of the increase in server ASPs was driven by a higher mix of premium products sold in Q2 2026 and YTD 2026, with demand-based pricing actions contributing to a lesser extent, in part to offset higher input costs. Server volume increased 9% compared to Q2 2025 and 2% compared to YTD 2025, primarily driven by higher hyperscaler demand. Market demand exceeded our available product supply in Q2 2026 and YTD 2026 due to internal supply constraints. Though we continue to add capacity in our factories to increase supply and mitigate these constraints, we expect industry-wide supply constraints to persist into next year. Other DCAI revenue was $951 million in Q2 2026, up $304 million from Q2 2025, and $1.9 billion in YTD 2026, up $533 million from YTD 2025, primarily driven by higher demand for purpose-built silicon, or ASICs.

Segment Operating Income Summary

▪CCPG operating income increased $290 million from Q2 2025, primarily driven by $701 million of higher product profit in Q2 2026 primarily related to higher client revenue, partially offset by higher client unit costs resulting from an increased mix of premium products sold in Q2 2026. Operating income also benefited from $258 million of lower operating expenses, primarily related to lower payroll-related expenditures resulting from headcount reductions taken under the 2025 Restructuring Plan and the effects of various cost-reduction measures. These benefits were partially offset by $669 million of higher period charges, primarily due to an inventory-related charge recognized in Q2 2026 to align product mix with customer demand.

▪DCAI operating income increased $1.8 billion from Q2 2025, primarily driven by $1.7 billion of higher product profit in Q2 2026, primarily related to higher server revenue, partially offset by higher server unit costs resulting from an increased mix of premium products sold in Q2 2026.

Total Intel Products operating income was $8.9 billion in YTD 2026, up $3.3 billion from YTD 2025.

▪CCPG operating income increased $445 million from YTD 2025, primarily driven by $673 million of higher product profit in YTD 2026, primarily related to higher client revenue, partially offset by higher client unit costs resulting from an increased mix of premium products sold in YTD 2026. Operating income also benefited from $507 million of lower operating expenses, primarily related to lower payroll-related expenditures resulting from headcount reductions taken under the 2025 Restructuring Plan and the effects of various cost-reduction measures. These benefits were partially offset by $735 million of higher period charges, primarily due to an inventory-related charge recognized in Q2 2026 to align product mix with customer demand.

▪DCAI operating income increased $2.8 billion from YTD 2025, primarily driven by $2.3 billion of higher product profit in YTD 2026, primarily related to higher server revenue, partially offset by higher server unit costs resulting from an increased mix of premium products sold in YTD 2026. Operating income also benefited from $512 million of lower period charges in YTD 2026, primarily related to the absence of Gaudi AI accelerator inventory-related charges incurred in YTD 2025.

Operating Segment Revenue Summary

Revenue was $5.8 billion in Q2 2026, up $1.3 billion from Q2 2025, and $11.2 billion in YTD 2026, up $2.1 billion from YTD 2025. Intersegment revenue was $5.5 billion in Q2 2026, up $1.1 billion from Q2 2025, and $10.7 billion in YTD 2026, up $1.7 billion from YTD 2025, primarily driven by higher wafer volumes from Intel 18A, Intel 3, and Intel 4 process nodes, which carry higher ASPs relative to predecessor process nodes. External revenue was $293 million in Q2 2026, up $271 million from Q2 2025, and $467 million in YTD 2026, up $414 million from YTD 2025, primarily due to Altera's transition to an external customer following the deconsolidation of Altera in Q3 2025.

Segment Operating Loss Summary

Operating loss was $2.1 billion in Q2 2026, compared to an operating loss of $3.2 billion in Q2 2025, primarily driven by $1.4 billion of lower period charges, including the absence of $797 million of non-cash asset impairment and accelerated depreciation charges recognized in Q2 2025 related to certain manufacturing assets that were determined to have no remaining operational use. This benefit was partially offset by $340 million of lower product profit in Q2 2026, driven by an increased mix of higher-cost wafers manufactured on our Intel 18A process node, which substantially offset higher revenue and lower wafer costs on Intel 3 and Intel 4 process nodes.

Operating loss was $4.5 billion in YTD 2026, compared to an operating loss of $5.5 billion in YTD 2025, primarily driven by $1.8 billion of lower period charges, including the absence of $797 million of non-cash asset impairment and accelerated depreciation charges recognized in Q2 2025 related to certain manufacturing assets that were determined to have no remaining operational use, as well as $391 million of lower inventory charges primarily driven by the intersegment sell-through of inventory with lower of cost or net realizable value intersegment reserves resulting from the early ramp of our Intel 18A process node. These benefits were partially offset by $830 million of lower product profit in YTD 2026, driven by an increased mix of higher-cost wafers manufactured on our Intel 18A process node, which substantially offset higher revenue and lower wafer costs on Intel 3 and Intel 4 process nodes.

Operating Segment Revenue Summary

All Other revenue was $1.3 billion, down $667 million from YTD 2025, primarily driven by lower revenue resulting from the deconsolidation of Altera in Q3 2025. This decrease was partially offset by higher Mobileye revenue in YTD 2026, which totaled $1.1 billion, up $120 million from YTD 2025, primarily driven by higher demand for Mobileye EyeQ* products.

Segment Operating Income Summary

All Other operating income was $230 million in Q2 2026, up $161 million from Q2 2025, and $332 million in YTD 2026, up $160 million from YTD 2025, primarily driven by higher operating income from our other businesses in Q2 2026 and YTD 2026, partially offset by the absence of Altera operating margin in Q2 2026 and YTD 2026.

Our revenue was $16.1 billion in Q2 2026, up $3.3 billion from Q2 2025, and $29.7 billion in YTD 2026, up $4.2 billion from YTD 2025, primarily driven by higher Intel Products revenue. Intel Products revenue increased 28% from Q2 2025 and 18% from YTD 2025, driven by higher DCAI and CCPG revenue. DCAI revenue increased 59% from Q2 2025 and 40% from YTD 2025, and CCPG revenue increased 13% from Q2 2025 and 7% from YTD 2025. These increases were primarily driven by ASP increases, the majority of which resulted from a higher mix of premium products sold, with demand-based pricing actions contributing to a lesser extent, in part to offset higher input costs in Q2 2026 and YTD 2026. Intel Foundry revenue increased, and All Other revenue decreased, compared to Q2 2025 and YTD 2025, primarily due to Altera's transition to an external customer following the deconsolidation of Altera in Q3 2025.

In Q2 2026 and YTD 2026, market demand exceeded our available product supply due to capacity constraints at our factories and industry-wide supply constraints. We expect these industry-wide shortages of substrates, memory and other critical components to persist into next year, which may limit our ability to fully meet customer demand. We continue to take actions to increase supply and mitigate these constraints, including adding capacity in our factories and securing component supply through long-term agreements with suppliers.

1 Amounts presented may not recalculate due to rounding.

Our consolidated gross profit in Q2 2026 increased by $3.0 billion, or 84%, compared to Q2 2025, primarily driven by $1.5 billion of higher product profit in Q2 2026, primarily related to higher revenue, partially offset by higher unit costs resulting from an increased mix of premium products sold in Q2 2026. Gross profit also benefited from $1.5 billion of lower period charges. The lower period charges resulted from, among other things, the absence in Q2 2026 of $797 million of non-cash asset impairment and accelerated depreciation charges recognized in Q2 2025 related to certain manufacturing assets that were determined to have no remaining operational use, partially offset by an inventory-related charge recognized in Q2 2026 to align product mix with customer demand.

Our consolidated gross profit in YTD 2026 increased by $3.6 billion, or 44%, compared to YTD 2025, primarily driven by $2.2 billion of lower period charges. The lower period charges resulted from, among other things, the absence in Q2 2026 of $797 million of non-cash asset impairment and accelerated depreciation charges recognized in Q2 2025 related to certain manufacturing assets that were determined to have no remaining operational use. Lower period charges also resulted from $294 million of lower inventory-related charges taken in YTD 2026 as compared to YTD 2025, primarily due to the absence of Gaudi AI accelerator inventory-related charges incurred in YTD 2025 and $226 million of lower reserves resulting from the sell-through of inventory with lower of cost or net realizable value reserves recognized during the early ramp of our Intel 18A process node, partially offset by an inventory-related charge recognized in YTD 2026 to align product mix with customer demand. Gross profit also benefited from $1.4 billion of higher product profit in YTD 2026, primarily related to higher revenue, partially offset by higher unit costs resulting from an increased mix of premium products sold in YTD 2026.

Research and Development

Q2 2026 R&D expenses decreased by $316 million, or 9%, from Q2 2025, and YTD 2026 R&D expenses decreased by $581 million, or 8%, from YTD 2025, primarily driven by lower payroll-related expenditures resulting from headcount reductions taken under the 2025 Restructuring Plan and other cost-reduction measures, as well as lower expenses in Q2 2026 and YTD 2026 due to the Q3 2025 deconsolidation of Altera. These decreases were partially offset by higher incentive-based cash compensation in Q2 2026 and YTD 2026.

Marketing, General, and Administrative

Q2 2026 MG&A expenses increased by $31 million, or 3%, from Q2 2025, primarily driven by higher share-based compensation, partially offset by lower payroll-related expenditures resulting from headcount reductions taken under the 2025 Restructuring Plan and other cost-reduction measures, as well as lower expenses in Q2 2026 due to the Q3 2025 deconsolidation of Altera.

YTD 2026 MG&A expenses decreased by $108 million, or 5%, from YTD 2025, primarily driven by lower payroll-related expenditures resulting from headcount reductions taken under the 2025 Restructuring Plan and other cost-reduction measures, as well as lower expenses in YTD 2026 due to the Q3 2025 deconsolidation of Altera. These decreases were partially offset by higher share-based compensation in YTD 2026.